Cooling Down Hot Air: A Global CGE Analysis of Post-Kyoto Carbon Abatement Strategies

28 Pages Posted: 29 Apr 2003

See all articles by Christoph Böhringer

Christoph Böhringer

University of Oldenburg - Economic Policy; Centre for European Economic Research (ZEW)

Date Written: August 1999

Abstract

The Kyoto Protocol marks a break-through in global warming mitigation policies as it sets legally binding emissions targets for major emitting regions. However, realisation of the Protocol depends on the clarification of several issues one of which is the permissible scope of international emissions trading between signatory countries. Unrestricted trade produces hot air when signatory countries whose Kyoto targets are well above their business as usual emissions trade in larger amounts of "abundant" emission rights. Concerns on hot air motivated proposals for caps on emissions trading by the EU. These caps are strictly refused by the USA and other non-European industrialized countries who want to exploit the full efficiency gains from trade. In this paper we show that there are cooling down strategies which can reconcile both positions. International permit trade provides enough efficiency gains to make all signatory countries better off than without permit trade while mitigating hot air. In other words, part of the efficiency gains from free trade could be used to pay for higher abatement targets of signatory countries which assure the same environmental effectiveness as compared to strictly domestic action or restricted permit trade.

JEL Classification: Q2, Q4, D58

Suggested Citation

Bohringer, Christoph, Cooling Down Hot Air: A Global CGE Analysis of Post-Kyoto Carbon Abatement Strategies (August 1999). ZEW Discussion Paper No. 99-43, Available at SSRN: https://ssrn.com/abstract=376186 or http://dx.doi.org/10.2139/ssrn.376186

Christoph Bohringer (Contact Author)

University of Oldenburg - Economic Policy ( email )

Centre for European Economic Research (ZEW) ( email )

D-68161 Mannheim
Germany
+49 6211235200 (Phone)
+49 6211235226 (Fax)

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